AI: AI Market Competition at high levels. RTZ #498

...examples in 'AI Reasoning' and beyond

Adam Smith’s ‘Invisible Hand’ of market competition is alive and well in this AI Tech Wave. Let me explain.

As I’ve covered at length before, regulators in the US and EU continue to fret over the need to regulate AI in this AI Tech Wave. And are litigating possible past antitrust and other behaviors by big tech in various jurisdictions.

Ironically, as an analyst through tech waves over three decades, I can say with confidence that the competition in this AI Tech Wave remains at least as robust as past tech waves like the PC and the Internet. This is the case amongst both the biggest tech companies, and amongst smaller companies up and down the AI tech stack I’ve discussed often.

These competitive forces are currently in play as the AI industry leader OpenAI is vigorously competing with LLM AI leaders like LLM AI as it races to AGI over the next few years. Especially on its progress with OpenAI-o1 ‘AI Reasoning’ ‘Strawberry’ product, as it races to GPT-5 and beyond. Google and others are not far behind in similar efforts at AI Reasoning.

As a case in point, I’d point to this Bloomberg piece “Google Is Working on Reasoning AI, Chasing OpenAI’s Efforts” where senior Google AI executives are fretting that OpenAI may have stolen a march on them on ‘AI Reasoning’.”

“Google is working on artificial intelligence software that resembles the human ability to reason, similar to OpenAI’s o1, marking a new front in the rivalry between the tech giant and the fast-growing startup.”

“In recent months, multiple teams at Alphabet Inc.’s Google have been making progress on AI reasoning software, according to people with knowledge of the matter, who asked not to be identified because the information is private. Such software programs are more adept at solving multistep problems in fields such as math and computer programming.”

“AI researchers are pursuing reasoning models as they search for the next significant step forward in the technology. Like OpenAI, Google is trying to approximate human reasoning using a technique known as chain-of-thought prompting, according to two of the people. In this technique, which Google pioneered, the software pauses for a matter of seconds before responding to a written prompt while, behind the scenes and invisible to the user, it considers a number of related prompts and then summarizes what appears to be the best response.”

Meanwhile, there are reports emerging on how competitive it was WITHIN OpenAI, who just closed a record funding, to release it’s OpenAI-o1 ‘Reasoning’ (aka Strawberry) product a few days ago. As Fortune reports in “Before Mira Murati’s surprise exit from OpenAI, staff grumbled its o1 model had been released prematurely”. It’s a detailed report on the debates within OpenAI between its research and product folks.

These efforts are another vivid example of the industry in a frenetic race to convert research projects into reliably engineered AI products and services. Going from barely baked ‘Science Projects’ as I discussed a few days ago cool new products on user hands.

These other area for robust competition is for AI Talent, a topic I’ve also discussed at length. This is also a raging area of competition in the AI industry. A glimpse into the current state of affairs is reported by the Information in “Behind OpenAI’s Staff Churn”:

“Another under appreciated factor in the leadership turnover is the persistent demand of key researchers for more compensation as OpenAI’s star and valuation have soared.”

“Efforts by rivals such as Sutskever’s new startup, Safe Superintelligence, to recruit OpenAI talent have exacerbated these talent crises. The hiring attempts have prompted OpenAI leaders to make generous counteroffers to retain researchers, said another person directly involved in a recent negotiation.”

Here’s more on OpenAI co-founder Ilya Sutskever’s recent startup SSI.

A different form of this talent competition has been of course the recent trend of large ‘AI Acquihires’ I’ve written about highlighting recent transactions like Microsoft/Inflection, Amazon/Adept, and Google/Character.ai, with more likely to come.

The broader point I’m outlining here is that intense market competition is definitely underway this AI Tech Wave, up and down the AI tech stack above.

It’s Adam Smith’s ‘Invisible Hand’ in action, despite the issues of big tech vs little tech dynamics being debated at the regulatory governance level today.

Regulators should take note, especially in current high-profile litigation. The markets are working as they should for societal good in the long run. Stay tuned.

(NOTE: The discussions here are for information purposes only, and not meant as investment advice at any time. Thanks for joining us here)